Mr. Speaker, in my original question, I asked the Minister of National Revenue about a Canadian company, Turquoise Hill Resources, that operated a very large, very profitable mine in Mongolia. The company is based in Vancouver and listed on the Toronto Stock Exchange.
A report from the Centre for Research on Multinational Corporations explained how Turquoise Hill Resources used a so-called mailbox company set up in Luxembourg to avoid paying about $690 million in Canadian taxes over a period of six years. The same report also suggested that Turquoise Hill Resources avoided paying hundreds of millions of dollars of taxes in Mongolia, but I want to concentrate on the Canadian side of the story here.
Coincidentally, there was a long opinion piece in The Globe and Mail today about this very report, written by a tax lawyer who wanted to ensure people did not frame this as tax dodging or tax cheating, but simply a story of a Canadian company doing what was legal, or, as the Supreme Court ruled, “taxpayers have the right to order their affairs to minimize tax payable.”
This is not a one-off case, and I am certainly not suggesting it is illegal. Turquoise Hill Resources acted within Canadian laws to lower its tax exposure. It even got a tax ruling from the Canada Revenue Agency that assured the company its scheme was fully approved.
This is the crux of the problem, and this is what concerns me. It is an example of how Canadian tax laws allow companies and individuals to legally avoid paying billions of dollars in taxes and why we should act to limit that practice.
We can certainly debate about what a fair amount of taxes would be, but when a Canadian company pays nothing or next to nothing in Canadian taxes on profits it makes in this country but ships offshore to a mailbox, something is clearly wrong with our tax laws.
This is a big problem for Canada. Some analysts have calculated that offshore tax havens funnel $10 billion to $15 billion every year in tax revenue to countries with very low tax rates. It is a major part of Canada's lost tax revenue, which has been estimated by the Conference Board of Canada to be as much as $47 billion every year.
The Government of Canada should be looking seriously at ways to remedy this huge problem.
I was recently talking to a major Canadian money manager and tax expert, and he brought up the subject of tax havens as a serious problem. He suggested a straightforward solution. Write tax treaties so companies must pay a minimum amount of tax at a reasonable rate if they are reporting foreign income. Therefore, the government could set a reasonable rate, say at 20%, still well below Canadian rates, so if a Canadian company reported $2 billion of income in Luxembourg and Luxembourg levied taxes at 4%, that company would pay 16% in Canada. There are likely other ways to tackle this, but we really have to do something.